A business as a whole includes a lot of elements, structures and decisions. Establishing a proper vision before communicating to prospective investors is essential for a company as it allows them to introspect and understand about the business.
Establishing a proper vision to communicate to investors includes evaluating the capital structure, allocation of funds, setting up of plan and delivering it to the prospective investors. Investors always tend to evaluate and understand a company’s capital structure before investing in them because determining the appropriate Capital structure is crucial for a company’s growth and financial health. Therefore it is essential for a company to adapt a capital structure by having an appropriate mix of debt and equity depending on the nature, stage and potential of the business. Evaluating the weighted average cost of capital, liquidity and solvency of the company as any potential investments depends upon these factors.
After accessing the right capital structure, it is important for a company to allocate those funds to projects where there are future economic benefits. It is a crucial component to attract investors because it can increase a company’s overall profitability and growth by yielding higher returns. Also an effective and efficient employment and deployment of funds will always result in an optimized and improved resource utilization system. Risk mitigation is another significant benefit of allocating funds across various potential investments as it helps in spreading the risk.
With core elements like capital structure and fund allocation in the right place, the next step is to come up with a plan to communicate with the investors. Communicating the plan is the hardest and the most important step as it should not just state the motive but also captures the essence and conveys it to the prospective investors. The plan should give a clear picture of the Business, it should define the company’s Mission, Vision and its Goals to the investors.
Points to keep in mind before and while communicating to the investors:
Always find a way to keep the investors engaged. Never let them get distracted.
Align with your vision and business strategy, so that you will keep track of your content.
Always be prepared to face questions from the investors and come up with precise and brief answers.
Keep it simple and time bound but also Inspiring, it should be ambitious but also attainable.
If needed you should be able to expand your pitch without getting diverted and by emphasizing how valuable their investment is.
Visual representation is never a bad option. Pitching your plan with a visual aid will not only help the investors in grasping your motive easily but also gains their attention.
We all know that communication is the key but we always forget to realize that establishing a proper vision before communicating is also important. A company can never go wrong while communicating with the prospective investor if they establish a proper vision.